Operations

Preparing Fleets for Upcoming Disruptive Changes

January 8, 2018
• by Tim C. King

Graphic courtesy of Getty Images.

Fleet managers are experienced with the idea of adapting to new technology trends. Integrating this understanding into their operations to improve customer service is inherently “business as usual” for fleets; it’s a functional requirement as old as the industry itself. With this history, it’s easy to assume that this will continue essentially unchanged into the future.

However, this, in fact, may not be the case. Examining what’s happened in recent years in other industries, combined with emerging new technology, suggests that fleets may be about to face unprecedented levels of disruptive change. And, this is coming from a number of directions.

Indeed, unexpected challenges for fleets and their leaders are becoming increasingly apparent. As a result, it’s quite likely it won’t be “business as usual” any longer for many fleets.

Direction

This will be revealed in several steps. First, by briefly reviewing the scope of fleet change we’re familiar with. Then we’ll look at two related technologies and how they’ve redefined other industries. Using this experience as a guide, we’ll look at emerging fleet trends to identify the potential for similar impacts in the transportation industry. This will reveal insights into both threats and opportunities — which may be largely determined by how fleet leaders respond.

Goal

There are two objectives here. The first, to understand and appreciate the scope of change fleets may soon be facing. And second, to recognize how this will impact leadership requirements.

This is aimed at identifying these hidden challenges to help you plan and prepare for them — since your fleet’s future may hang in the balance.

At a Glance

Understanding how the evolution of the internet and cellular communications impacted the industry can help fleets prepare for future industry disruption.

Autonomous and electric vehicles may forever change the future of fleet management.

The best way for fleets to handle disruptive trends is to be prepared for them; learning to let go of dated practices and procedures can help.

Fleet Industry Experience

The scope of past fleet technological change has typically encompassed the equipment, management tools, and ancillary support functions.

This has resulted largely in a progression of equipment and related process improvements. And, in some cases, process redesign has occurred with supporting functions.

Generally, the result has been an overall evolution of improved fleet administration, operations, and maintenance functions — all benefitting customers. Typically though, fleets have not experienced fundamental change redefining their support functions.

However, if we examine both current and future trends, it suggests an unanticipated expansion in the scope of coming change. Thus, both the resulting impact and required leadership responses should be anticipated by fleets. For many, these may present new and unfamiliar requirements.

Internet & Cellular Communications

We’re actually familiar with this type of disruptive change in other industries, which includes changes regarding cellular communications and internet-based technologies, for example.

Together, these have, and continue to, redefine our society. We see this in many ways, but as with other disruptive technologies, we are only beginning to recognize their significance; specifically regarding the focus on their impact on redefining retail commerce.

Because of this, numerous new firms have experienced unanticipated success. At the same time, other traditional brick-and-mortar businesses are struggling to survive. And, still others are gone; being displaced by new technology.

For most retail businesses, these two technologies have resulted in extensive change — both in redefined business models and leadership requirements.

For most firms, their business models had to change to incorporate the new opportunities presented. Without this, they simply couldn’t continue meeting their customers’ expectations.

In order to facilitate this, entirely new demands were placed on some leaders. It’s not that the demands didn’t exist in the past; it’s that with many businesses they simply weren’t previously necessary. As a result, they had been under-valued and lost.

A similar experience may be about to happen to many fleets; two emerging transportation technologies may make current fleet business models obsolete.

Many of today’s fleets may be about to experience the aforementioned disruptive changes. This will require a similar shift in leadership skills to ensure continued success.

This isn’t idle conjecture; the trends are increasingly evident. What may be missed is the full extent of these potential “game changers.”

Autonomous Vehicle (AV) Technology

AV technology is closer on the horizon than many people realize. Aspects of it are here now; with lane departure, adaptive cruise control, and intelligent braking capabilities. These are available on a number of vehicles sold today.

As this technology continues to improve and is deployed, the ultimate impact will be the elimination — or significant reduction — in the need for drivers.

This certainly does represent a major change, but the full scope of this may not be realized by some fleets.

There are a couple of reasons for this. First, for many fleets, drivers are the responsibility of their operating groups — not fleet. The second is the thinking — whether the vehicle is driven by a human or a computer — the equipment will still require the same support services. Thus, it could be easy to assume that most fleets will remain largely unchanged.

With specialized fleets, this may be somewhat true in the near term. But, for others, this outcome is unlikely.

In addition, adding AV assets to the mix would only further reduce fleet management and resource requirements. One is the virtual elimination of accidents, the resulting damages, and inappropriate vehicle use.

Electric Vehicle (EV) Direction

Increasing concerns with fossil-fuel emissions and their effect on the planet is a global trend prompting change in many industries. This has resulted in the increased interest in alternative-fuel vehicles (AFVs).

And, there are many ways to address fossil fuel concerns, one being the emergence of electric vehicles (EVs). This is becoming an increasingly viable transportation fuel for a number of reasons.

The most obvious is continuing improvements in battery technology and the associated lower costs. This is evidenced by increased EV availability in the light vehicle marketplace.

Another inherent advantage with EV technology is it fits well with AV, electronic, and telecommunications trends.

But, there’s another advantage with EVs that’s not generally well-known, which is how it can impact the electric utility industry, which is also facing similar concerns with fossil fuel use.

EVs offer a number of synergistic solutions for energy utilities, in terms of battery storage, charging flexibility, and telecommunication-based energy management capabilities.

Clearly, there are more benefits to EVs than just as an alternative transportation fuel, though it is a large focus. Indeed, several other countries are recognizing this; with some countries ceasing the manufacture of fossil-fueled vehicles in coming decades.

And, these are in addition to all of the advantages to fleets and their customers; with much lower operating, maintenance costs, associated requirements, and improved customer convenience.

Thus, while widespread use of EVs is uncertain, it may be more likely than many realize.

If EV and AV technologies are combined, this integration will likely occur in the light vehicle segment initially. With these technologies, the administrative, operations, and maintenance support functions will all be redefined.

EV Operations Management

The immediate change to fleet operations with EVs is the transition to electric power over fossil fuels. This change will involve implementing a charging infrastructure, adding new management tools, and creating appropriate associated processes and procedures.

These new requirements are usually the focus when considering EV adoption, since they need to be accomplished. But there also levels of disruption that will occur with this, which will simplify or eliminate certain fleet elements.

For some fleets, in-house liquid fuel facilities and their associated requirements (fuel purchasing, permitting, and regulatory requirements) will be eliminated.

For these, remaining needs (both liquid and electric) could be filled with contract suppliers. Thus, the fuel delivery function will be greatly simplified and require fewer resources; particularly labor.

However, there’s another added benefit to EVs with fuel management: Fuel security will be virtually ensured. EV fueling should inherently identify the fleet vehicle and authorize its’ charging. To put it simply, with the adoption of EVs, many fuel management functions will go away, and those remaining will be reduced and simplified. At the same time, fuel cost should substantially be reduced.

The net result: This function will require fewer resources and require less attention. This isn’t unique though, as similar effects are expected with the other fleet functions as well.

EV Maintenance Management

The first, and most obvious reason, is that current engine oil/filter changes will be eliminated. Additionally, other scheduled maintenance requirements will likely be significantly extended or essentially eliminated with EVs.

One of these will be brake maintenance; being reduced or, again, essentially eliminated due to regenerative braking.

However, tasks remaining largely unchanged will be electrical, electronic, and tire maintenance.

This will redefine technician requirements. For light vehicles, required labor requirements will be simarly substantially reduced. At the same time, the technical requirements may become more specialized, and may make outsourcing the labor an increasingly attractive option.

Expanded Management Involvement

Combining EV and AV technologies will redefine many fleets’ operations and maintenance (O&M) support functions. As such, it’s likely to also gain executive-level attention and involvement due to the potential extent of the impacts and resultant savings.

This introduces an entirely new level of potential change for fleets. First, aforementioned O&M savings will be identified. Second, this will lead to further examinations aimed at identifying other related opportunities.

Asset Management Opportunities

It’s reasonable to expect disruptive trends to affect asset management. For many fleets, there are opportunities to substantially simplify and reduce functional requirements.

Leasing provides the best example of this, since it’s a continuation of the trend to simplify and further reduce the remaining fleet asset management requirements.

This is another redefining change that’s easy to overlook. The advantages of leasing are often unknown; with many fleets having only focused on its high-level financial aspects.

What are frequently missed are all the inherent improvements to customer service with lower costs and higher quality. This is achieved with reducing or eliminating a multitude of non-value added processes necessarily associated with equipment purchasing. These include budgeting, prioritizing, specifications, bidding, retiring, etc. Add further emerging options with contracting fleet assets (via services like Uber & Lyft — with all types of equipment) and fleet asset management could similarly be reduced.

As these trends increase in scope and scale, change will undoubtedly extend to these types of fleets.

Changing Leadership Requirements

Changes resulting from AVs, EVs, and the resulting new associated directions, may substantially eliminate many previous core fleet functions. The scope of this is on a scale unprecedented in the fleet industry.

This will lead to requirements that may be brand new to leadership. And, it’s the resulting threats that are of particular concern to leaders.

One prospective direction could be to consolidate fleet responsibilities with other increasingly similar support activities such as IT or facilities functions.

Another would be to privatize the fleet function by outsourcing. This option is a particularly concerning threat for most fleets. And, how fleet managers respond will determine their success.

However, customer service needs for fleets will remain the same. Optimum customer service success depends upon meeting three requirements: low costs and quality services; managing customer perception; and achieving win-win results beyond expectations.

However, disruptive technologies and the associated change will substantially lower costs. Similarly, many aspects of customer quality will be improved.

Managing Customer Perception

How fleet leaders respond to managing customer perception will determine their success. And, this too, may arise in unexpected ways.

Leaders continuing to cling to prior practices and misperceptions are particularly at risk. For example, thinking fleet size relates to power, prestige, authority, and particularly value will be toxic to continued success.

Similarly, overlooking “it’s all about the customer” and viewing customers as “users” will prove equally unsuccessful.

All of this, and failing to champion change, will all lead to undesirable perceptions — prompting confidence concerns with the leaders’ loyalty, trust, and competence. And, this will occur with fleet staff, internal customers, and the organization’s owners and executives.

It’s the latter where this is particularly critical. If their owners/executives sense a need to take more active role in managing this change, the associated loss of fleet influence could impact the fleet’s success, or its existence altogether.

Thus, a critical aspect for fleet leaders is recognizing these pitfalls. But, equally important is to proactively embrace and champion this change on behalf of their customers.

A goal for any fleet facing these challenges is to survive. Being customer-driven should equate to achieving success with win-win customer results.

Learn from Other Industries

All of these characteristics are evident with successful organizations in other industries that have faced similar disruptive change.

Firms struggling to adapt exhibit common traits typically react and fail to recognize either the new requirements or the prospective opportunities.

Often they don’t change and can’t adapt to the new environment. As a result, they largely continue to do business as they always have in the past.

The net result is they lose customers to their competition — with the eventual prospect of being replaced. Since they no longer meet customer expectations, their services become obsolete.

It’s a simple process for others to see, but these firms and leaders are often “caught up in managing the details.” As a result, they completely miss their changing business environment and customer needs.

Does this risk sound familiar? For fleet leaders this is a particular hazard with the day-to-day challenges and inherent resource constraints they face.

Ultimately, recognizing the scope of this change and associated requirements is the first step. The next is responding proactively and effectively.

This goes way beyond just the immediate scope of the technologies involved. With many of the functions being reduced or eliminated, relying on previous best practices will simply no longer work.

To continue to exceed customer expectations, fleet leaders will need to proactively embrace and champion this change. These will be defining characteristics for fleet leaders facing these new challenges.

Proactive and innovative leadership is required for optimal success.

Apply what we’ve experienced with cellular and internet communications, to the trends emerging in the transportation industry. With this approach, you can continue to add-value for your customers. And, that’s what it’s all about.

About the author: Tim King retired in 2008 following a 30-year career with what is now NVEnergy, an electric utility based in Las Vegas. He is the author of Fleet Services: Managing to Redefine Success.

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